Vulcan execs all smiles after gas discovery in Western NL
12/8/2009Vulcan Minerals lit a big birthday candle for its 50-year-old president, Patrick Laracy, last week - flaring natural gas from a discovery well on Newfoundland's west coast.
It's the second discovery for Vulcan south of Stephenville where the company has been carrying out a $15-million exploration program.
The company has plenty of work ahead to determine how much oil and gas is at the Red Brook No. 2 well.
We have to take it one step at a time, make the discovery, do our detailed testing and delineation work. It's looking very good - I'm very, very happy with what we've discovered there," Laracy said.
"Our first two deep wells have been two discoveries, and this is quite an accomplishment really."
It hasn't been an overnight success. For most of the past decade, Vulcan has been steadily exploring for oil and gas on the west coast.
"We've had our eyes open, and our ears open. We've been learning, and it is a process of elimination ... making better choices as a result of your past experience," Laracy said.
"We've never lost faith. ... I think this is just the start of even more positive results to come."
The company must prove Red Brook No. 2 can pump natural gas at sustainable flow rates.
To do that, Vulcan is looking for a company to carry out a fracture stimulation program - injecting water or propane into the well to stimulate the flow of natural gas from the source rock.
"Oftentimes ... you tap into zones of better permeability. There's always sweet spots in any oil and gas field."
Laracy says fracture stimulation, using propane, has been successfully done in New Brunswick.
"They're increasing the flow rate 10-fold."
Vulcan will use information gleaned from that process to estimate natural gas resources at Red Brook.
And Laracy has plenty of ideas on how to use natural gas.
The possibilities include building a pipeline and exporting it via Nova Scotia or using the energy for local industry.
But his preference is generating power for the island's electrical grid.
"This is a resource that will see a usage in Newfoundland, I have no doubt about it," he said.
"I think the most realistic usage may be the generation of electricity ... because Holyrood is burning Bunker C oil, and it's an environmental polluter.
"Natural gas is a relatively clean form of energy compared to that."
Laracy envisions a small thermal plant on the west coast to generate electricity the same way Holyrood does using more costly Bunker C crude.
Vulcan, which is also a partner in Parson's Pond with Nalcor Energy, may send its drill rig north to carry out a planned $20-million, three-well program led by the province's energy corporation.
Nalcor expects to be drilling at that Northern Peninsula exploration property sometime in January.
"We're talking with Nalcor and I'm hopeful that rig will go up there."
As well, Laracy expects to be drilling oil targets at Flat Bay this summer.
"We're going flat out."
(Transcontinental)
